Tax Implications of a Second Home

Learn how mortgage interest, property taxes, rental property and tax-free profit affects your tax return. Thinkstock If you are in the market for a second home, congratulations! Not only can you look forward to having a place to relax, you also can garner some tax benefits for that place in the mountains or at the beach.

Many homeowners look forward to purchasing a second home that can be used for vacations, rental income, investment purposes or as a primary residence during retirement. Current tax laws offer several tax breaks that can help make second-home ownership more affordable.

You rent the property to others most of the year. You rent the property to others for a very short time. You use the property yourself and rent it when you're not there. Here's a closer look at the tax implications of these scenarios.

If you are considering purchasing a second home, there are a number of different things that you will need to look at. One of the most important things to think about is the tax implications that are created by this scenario. Here are some of the tax implications of purchasing

Most people are sold-perhaps oversold-on the tax benefits of homeownership. But if they decide to own a second or vacation home, they'll encounter potential tax traps, as well, including a change in the law Congress made in 2008.

That cottage near the beach or cabin on a lake can be more than a good vacation retreat. If you can afford payments on two mortgages, a second home can give you a nice tax break. If you own two homes it pays to be aware of Internal Revenue Service rules.

Buying a home is one of the largest financial decisions you are likely to make in your lifetime. Not only does home ownership affect personal wealth, it alters your tax burden. Home ownership makes you subject to property taxes and other tax issues, which are complicated when you own a second home.

It's a great time to purchase or own a second home. Recently I was talking with CPA Angie Ledbetter from Guest, Shutte, Cosper and Ledbetter in Flagstaff, AZ about the tax benefits of owning and purhcasing a second home. Here were the points she shared with me: Tax Benefits for owning a second home: 1.

If you buy a second home as an investment to rent out or as a vacation home, you will incur a new set of tax liabilities. Before you buy a second home, it's important to fully understand the tax implications of your purchase.

Effective: January 1, 2013 Supplemental Health Care Reform Tax upon the Capital Gain sale of Certain Real Property. There has been a great deal of misunderstanding that the new Health Care Reform Bill imposes a 3.8% sales tax on the sale of each property. First, there is no "sales" tax on the sale of real property.